China refiners cut base oils output to boost diesel production

10 November 2010 10:15[Source: ICIS news]

SHANGHAI (ICIS)--?xml:namespace>China's major refiners will have significantly lower base oils output in November as feedstocks are being diverted to process diesel, which is in short supply in certain parts of the country, industry sources said on Wednesday.

“Our group cut base oils output by 10% in November as we allocated more feedstock to boost diesel production,” a source at petrochemical giant Sinopec said in Mandarin.

Diesel consumption in China had dramatically increased in recent months as a direct consequence of the government-mandated curbs on power usage by industries.

Sinopec subsidiary Jingmen Petrochemical, which has a 250,000 tonne/year base oils capacity, would halve its monthly output in November to less than 7,000 tonnes, the source said.

“Most output was [being] supplied only to Sinopec's lubricant plants and the group doesn’t have available stocks to sell to the market,” he said.

Meanwhile, PetroChina had suspended spot market sales of base oils this month as production would not even hit 60% of its average monthly output, a company source said.

Apart from beefing up its diesel production rates, PetroChina also shut some plants for maintenance this month.

This included a 700,000 tonne/year naphthenic base oil refinery in Karamay, Xinjiang province, and a 150,000 tonne/year Group I base oils refinery in Fushun, Liaoning province.

Most regions in China were completely out of stock of low-to-mid viscosity base oils grades such as SN150 and N150 in the absence of replenishment from both Sinopec and PetroChina, pushing ex-tank prices higher. Prices were up by yuan (CNY) 100-400/tonne ($15-60/tonne) this week.